Why Your Favorite Products Could Soon Cost More as Manufacturers Protest New Sugar Tax

The manufacturing industry in Kenya has stepped up its fight against the Finance Act 2026 after witnessing a 433% rise in excise duty on industrial sugar.

KAM noted that the taxation policy may lead to increased cost of production, loss of competitiveness of the country’s products, and even high prices of goods for customers.

This was brought out by the Kenya Association of Manufacturers(KAM), during their talk with the National Assembly Speaker, Moses Wetang’ula.

Under the Finance Act 2026, excise duty for industrial sugar rose from Ksh 7.50 per kilogram to Ksh 40 per kilogram, a decision that has been criticized by manufacturers who claim that this will make business even more expensive.

Industrial sugar is among the essential ingredients for processing food products, producing candies and manufacturing beverages and, thus, attracts a variety of statutory charges, such as the Port Health charge, the Biosafety charge, and the Sugar Development Levy.

According to KAM, the recently introduced tax is imposed during an era where manufacturers have to face a lot of challenges due to increased prices of energy, transportation costs, and other statutory payments.

Manufactures Cite High Costs and Uncompetitive Position on Industrial Sugar 

Bharat Shah, a director of the KAM Board, indicated that the increased rates of the excise duty will affect the competitive ability of Kenyan manufacturers to compete effectively in the regional and international market due to the higher cost of manufacturing products.

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“If the measure is implemented, Kenya risks losing its export competitiveness as manufacturers grapple with significantly higher input costs. The 433 percent increase in excise duty on industrial sugar will inevitably be passed on to consumers through higher product prices, making locally manufactured goods less competitive in both domestic and export markets,” Shah said.

Industry Dreads Job Losses and Closure of Businesses

KAM CEO Tobias Alando warned that the additional cost of doing business would have widespread repercussions on business operations, employee welfare and government tax collection efforts should the manufacturers become unable to continue production due to the increase in costs.

“The increased cost burden could force businesses to scale down operations or shut down altogether, putting jobs at risk while reducing government tax revenues. The higher production costs will also strain manufacturers’ cash flows, limiting opportunities for business expansion, investment and innovation,” Alando said.

Also Read: Govt Denies Reports of Dangerous Sugar Flooding Kenyan Market

Policy Review Call

In spite of its objection to the taxation proposal, the organization highlighted its commitment to promoting local industries and to expanding production domestically where commercial viability was possible.

The organization called upon the government to collaborate with all stakeholders from the industry to revise the excise duty to formulate a balanced policy.

“We urge the government to review the excise duty and engage industry stakeholders in developing a balanced policy that safeguards jobs, promotes industrial growth and preserves Kenya’s competitiveness,” the delegation said.

In response to this issue, National Assembly Speaker Moses Wetang’ula expressed his commitment to the manufacturers that the government will continue to ensure a conducive business environment.

“The government remains committed to creating a conducive business environment and ensuring that policy measures support, rather than hinder, the growth of local industries. We are equally committed to preventing business closures and protecting Kenyan jobs,” Wetang’ula said.

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National Assembly Speaker, Moses Wetang’ula together with KAM CEO Tobias Alando at the National Assembly building during the discussion of 433% Excise Duty on industrial sugar. PHOTO/ KAM